SBI Eyes Debt Fundraising Initiative by August Through a Tier II Bond Issue

The State Bank of India (SBI), the country’s largest public sector lender, is gearing up to enter the debt market with a significant bond issuance, potentially marking the start of a broader fundraising trend among government-owned banks. According to a Reuters report, SBI is planning to raise ₹50 billion through Basel III-compliant tier-II bonds in the coming months. 

SBI Eyes Fresh Capital Through Basel III-Compliant Bonds

State Bank of India is expected to initiate a major debt fundraising activity by issuing Basel III-compliant tier-II bonds, according to a Reuters report on Friday. The public sector banking giant plans to raise around ₹5000 Crore (approximately $584.59 million) through these bonds, which will carry a maturity of either 10 or 15 years and are expected to be launched by July or August.

As per Reuters reports, "The initial level talks have already started, but the duration would be finalised looking at the rates at the time of issuance and investors' interest." 

Furthermore, SBI might explore a 15-year bond structure with a call option after 10 years, following the model of its previous issuance in September 2024, when it raised ₹7,500 Crore using similar bonds. In the last financial year, the bank had raised ₹15,000 Crore through tier-II bonds, highlighting its consistent use of such instruments for capital augmentation.

Muted Participation from Public Sector Banks in FY25 So Far

Despite the new fiscal year beginning on April 1, no other state-run lender has accessed the debt capital market, making SBI’s upcoming bond issue potentially significant in reviving activity among public sector banks. Notably, SBI has also remained absent from the bond market in the first half of 2025, having deferred a planned infrastructure bond issue in March due to high yields.

In contrast, ICICI Bank, a private sector counterpart, managed to raise ₹10 billion earlier this week via 15-year tier-II bonds with a call option after 10 years, offering a 7.45% coupon rate. The comparative lack of activity from public sector banks underlines the importance of SBI’s move, which could set a precedent and encourage other lenders to follow suit in the coming months.

Read More: ICICI Bank Raises ₹1,000 Crore via Tier-II Bonds Amid Strong Demand!

SBI Share Price Performance 

As of 27 June 2025, SBI shares closed at ₹804.55 per share, a surge of 0.94%. Over the past month, the stock has declined by 1%.

Conclusion

As the State Bank of India readies itself for a bond issuance, the transaction could act as a bellwether for renewed fundraising among state-run banks. With investor interest and yield trends being key determinants, the success of this move may influence broader market dynamics in the fiscal year ahead.

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